Correlation Between Frontier Transport and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Frontier Transport and Kap Industrial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Frontier Transport and Kap Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontier Transport Holdings and Kap Industrial Holdings, you can compare the effects of market volatilities on Frontier Transport and Kap Industrial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Frontier Transport with a short position of Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Transport and Kap Industrial.
Diversification Opportunities for Frontier Transport and Kap Industrial
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Frontier and Kap is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Transport Holdings and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings and Frontier Transport is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Frontier Transport Holdings are associated (or correlated) with Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Frontier Transport i.e., Frontier Transport and Kap Industrial go up and down completely randomly.
Pair Corralation between Frontier Transport and Kap Industrial
Assuming the 90 days trading horizon Frontier Transport Holdings is expected to under-perform the Kap Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Frontier Transport Holdings is 1.63 times less risky than Kap Industrial. The stock trades about -0.08 of its potential returns per unit of risk. The Kap Industrial Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 30,100 in Kap Industrial Holdings on October 24, 2024 and sell it today you would lose (600.00) from holding Kap Industrial Holdings or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontier Transport Holdings vs. Kap Industrial Holdings
Performance |
| Timeline |
| Frontier Transport |
| Kap Industrial Holdings |
Frontier Transport and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontier Transport and Kap Industrial
The main advantage of trading using opposite Frontier Transport and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Transport position performs unexpectedly, Kap Industrial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kap Industrial will offset losses from the drop in Kap Industrial's long position.| Frontier Transport vs. E Media Holdings | Frontier Transport vs. Hosken Consolidated Investments | Frontier Transport vs. CA Sales Holdings | Frontier Transport vs. Blue Label Telecoms |
| Kap Industrial vs. Frontier Transport Holdings | Kap Industrial vs. Astoria Investments | Kap Industrial vs. Allied Electronics | Kap Industrial vs. Astral Foods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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